In the European session, the only important economic data comes from the UK Retail Sales. However, this is not likely to influence the Bank of England’s decisions or the market, as all eyes are on the US Non-Farm Payroll (NFP) data coming out later today. The American session will highlight Canadian employment numbers and the US NFP report. The NFP is crucial because it affects interest rate expectations and global markets.

NFP Predictions And Expectations

For the NFP, analysts expect 75,000 new jobs added in August, slightly up from 73,000 in July. With fewer people in the workforce, the breakeven rate for job creation is estimated to be between 50,000 and 80,000. The unemployment rate is predicted to rise from 4.2% to 4.3%. Wage growth is expected to show an annual increase of 3.7%, down from 3.9%, while monthly earnings should stay steady at 0.3%. Average Weekly Hours worked are anticipated to remain at 34.3. In Canada, experts forecast the addition of 10,000 jobs in August after a loss of 40,800 jobs in July. The unemployment rate is likely to increase to 7.0% from 6.9%. While the NFP is the main focus, a weak Canadian report could raise chances for a Bank of Canada rate cut, currently sitting at 64%. Today’s US jobs report is crucial as it may influence the Federal Reserve’s next interest rate decision. According to the CME FedWatch Tool, there’s about a 40% chance of a rate cut at the September 2025 meeting. A weak report could raise that probability above 50%, impacting market sentiment in the coming weeks. We expect the headline NFP number to be around 75,000, which should keep unemployment stable given current labor conditions. The anticipated dip in annual wage growth to 3.7% is vital, particularly after the Core PCE inflation reading for July 2025 showed 2.8%. This could confirm a trend of disinflation, giving the Fed room to ease up on policy.

Market Volatility And Trader Strategies

With the potential for significant market movement, traders should prepare for heightened volatility. Options on major indices like the S&P 500 indicate increased implied volatility, with the VIX index recently near 19, a rise from its summer lows. Traders may employ strategies such as straddles to capitalize on big price shifts in either direction following the announcement. If the report is much weaker than expected, especially with lower wages, it would likely strengthen bets for a September rate cut, resulting in a positive impact on equities and bonds. In this case, call options on interest-rate-sensitive assets could perform well. On the flip side, a surprisingly strong jobs number could delay rate cut expectations, leading to higher yields and lower equities. We are also keeping an eye on Canadian job data, where the market anticipates a 64% chance of a Bank of Canada rate cut this month. This follows last week’s data from Statistics Canada, which noted a slight contraction in the economy for the second quarter of 2025. Another disappointing jobs report today could solidify that cut, potentially creating a policy divergence with the US and affecting the USD/CAD exchange rate. Create your live VT Markets account and start trading now.

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